U.S. rate rises reduce room for Brazil to lower FX swaps -cenbank

BRASILIA, Sept 16 (Reuters) - An impending increase in U.S.
interest rates has reduced the scope for the Brazilian central
bank to lower its stock of currency swaps, used to smooth over
volatility in the foreign exchange market, bank chief Ilan
Goldfajn said in a interview.

"We always said that we will reduce the swaps' stock
depending on (market) conditions and those conditions are
changing now," Goldfajn said late on Thursday. "The market is
under pressure as we see the normalization of U.S. monetary
conditions advancing."

Since he joined the bank in June, Goldfajn has more than
halved the stock of currency swaps, which function like dollar
sales to investors but cost taxpayers dearly when the real
currency declines.
(Reporting by Alonso Soto, Marcela Ayres and Daniel Flynn)